Tag Archives: retirement investment

The financial norms of our society have changed considerably over the past five years. Assumptions surrounding retirement, investment returns and job security have all changed 180 degrees.

Perhaps this recession has been so monumental that it will permanently change the old norms and embrace a new realistic standard. Will this crisis create a new generation of Americans that look at money and entitlement similar to those who lived through the Great Depression?

Prior to this current recession, many people were living a lifestyle that was beyond their means. The Bureau of Economic Analysis stated that in 2005, America was only saving approximately 1 percent of its income. For many, the need for consumption of goods and services dominated their paychecks, so much so that they exhausted their savings accounts, ran up credit card balances and stripped the equity from their homes. You could say that America was living an era of overindulgence.

Today, it seems that people appreciate and respect their money more than they have over the past few decades. If they are currently employed, they are grateful to be able to provide for their families, as well as make sure that every dollar is stretched to its full potential.

Consumers now realize that when economic times become difficult, they cannot depend on banks to lend them money. This is why America is now saving more that 6 percent of its income — we are preparing for the unexpected and unknown.

In my opinion, the more people save, the stronger our economic landscape will become over time.

Of course many economists and Wall Street banks would love for consumers to return to their old spending habits, which would create a quick and bliss recovery. Our economy is dependent on consumer spending and statistics have shown that the American consumer represents approximately two-thirds of the nation’s Gross Domestic Product. Unfortunately, the fundamental problem of overindulgence would not be addressed if this were to happen. We would only be setting the stage for another crisis in the future.

Fundamentally, it is beneficial to our financial system that Americans are saving more. It is unrealistic to assume that the United States economy will bounce back quickly; it will most likely take a number of years and still produce a high level of discomfort.

A slow recovery is acceptable as long as the consumer continues to make smarter decisions financially and attempts to avoid past mistakes. Perhaps if this positive trend continues, could our country’s best years still be ahead of us?